Financial Viability Profit Margin and Solvency Margin MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Financial Viability Profit Margin and Solvency Margin, a fundamental topic in the field of IC 92 Actuarial Aspects of Product Development. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Financial Viability Profit Margin and Solvency Margin MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Financial Viability Profit Margin and Solvency Margin mcq questions that explore various aspects of Financial Viability Profit Margin and Solvency Margin problems. Each MCQ is crafted to challenge your understanding of Financial Viability Profit Margin and Solvency Margin principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 92 Actuarial Aspects of Product Development tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Financial Viability Profit Margin and Solvency Margin MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

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Discuss
Answer: (a).The ratio of net present value of future net cash flows to the new business strain Explanation:Profit margin (return on capital) represents the ratio of net present value of future net cash flows to the new business strain, which is the return on insurer’s investment in the product.
Q32.
Which of the following is considered as an outflow in the calculation of profit margin?
Discuss
Answer: (c).Management expenses Explanation:Management expenses are considered as an outflow in the calculation of profit margin, along with claims and commission expenses.
Discuss
Answer: (b).It allows for easy comparison between different products Explanation:The advantage of using a cash flow method to determine profit margins and premium rates is that it allows for easy comparison between different products in terms of their profitability.
Q34.
What is the term used to refer to the estimate of profit made when the last policyholder exits the portfolio?
Discuss
Answer: (b).Surplus Explanation:The estimate of profit made when the last policyholder exits the portfolio is usually referred to as surplus, which is then distributed to policyholders.
Discuss
Answer: (c).As profit criteria to price new or existing products Explanation:Profit margins are typically used as profit criteria to price new or existing products in the insurance industry, helping insurers determine appropriate premium rates.
Discuss
Answer: (a).The amount of capital required to be kept by the insurance as buffer over and above the reserves of the policies Explanation:The Required Solvency Margin (RSM) is the additional amount of capital required to be kept by the insurance as buffer over and above the reserves of the policies to ensure financial stability.
Discuss
Answer: (c).Interest rate risk and mortality risk Explanation:The computation of RSM in insurance addresses the interest rate risk and mortality risk inherent in the business.
Discuss
Answer: (c).The excess of assets over liabilities Explanation:The Actual Solvency Margin (ASM) represents the excess of assets over liabilities in the insurance company.
Discuss
Answer: (c).By dividing the Actual Solvency Margin (ASM) by the Required Solvency Margin (RSM) Explanation:The solvency ratio is calculated by dividing the Actual Solvency Margin (ASM) by the Required Solvency Margin (RSM).
Discuss
Answer: (b).The adequacy of capital resources to meet various risks assumed in the business Explanation:Risk Based Capital (RBC) tests whether an insurer has enough capital resources to meet various risks assumed in his business.
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